Brexit may hit UK car industry’s attractiveness for European car makers


Commenting on new car registrations in 2015 Ana Boata, European economist at Euler Hermes, the UK’s leading trade credit insurer commented:

UK car sales had a record year in 2015, but the shadows of a Brexit ‘no’ vote hangs over the market. Firstly, the UK industry depends on equipment imported from Germany, France, Spain and Italy, and would face higher import price due to the introduction of tariffs and depreciation in sterling that would ultimately lower profitability.

“Second, given the likelihood of EU tariffs on imports coming from the UK, manufacturers would have to be concerned about a loss in terms of the competitiveness of their products. The negative impact would be even higher for those positioned in medium-range automotive exports, which are more sensitive to price hikes. Third, as a consequence, they might be forced to lower my selling prices to maintain the market share, but at a cost of profitability.

“Finally, given the cost of relocation, it would be difficult to move to another country in the EU, but they might decide to lower production in the UK and increase it in other EU countries such as Slovakia, Spain, France or even Turkey. This would have a negative effect on employment in the UK.”